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What is Annual Tax on Enveloped Dwellings (ATED)?
ATED is an annual return that must be completed by companies that own a UK residential property with a value in excess of the ATED threshold. From 1 April 2016, UK residential properties which were worth more than £0.5million as at 1 April 2012 have been in the scope of this charge and an ATED return will need to be submitted if your property:
- is a dwelling (see below)
- is in the UK
- was valued at more than £0.5 million on 1 April 2012, or at acquisition if later
- is owned completely or partly by a
- company
- partnership where one of the partners is a company
- collective investment scheme – for example a unit trust or an open ended investment vehicle
What is a dwelling for ATED purposes?
Your property will be a dwelling if all or part of it is used, or could be used as a residence, for example a house or flat.
It includes any gardens, grounds and buildings within them. Some properties aren’t classed as dwellings. These include:
- hotels
- guest houses
- boarding school accommodation
- hospitals
- student halls of residence
- military accommodation
- care homes
- prisons
What do I need to pay for ATED?
To work out what you need to pay you’ll need to value your property using a valuation date.
In some circumstances you can also ask HMRC for a Pre-return banding check (PRBC).
For the 5 chargeable periods beginning from 1 April 2018, the 1 April 2012 valuation date was superseded by the 1 April 2017 valuation date. Properties owned on or before 1 April 2017 should be revalued using that date. If you acquired the property after 1 April 2017 the later date is to be used.
Chargeable amounts for 1 April 2021 to 31 March 2022 (returns to be filed by 30 April 2021).
| Property value | Annual charge |
| More than £500,000 but less than £1 million | £3,700 |
| More than £1 million but not more than £2 million | £7,500 |
| More than £2 million but not more than £5 million | £25,200 |
| More than £5 million but not more than £10 million | £58,850 |
| More than £10 million but not more than £20 million | £118,050 |
| More than £20 million | £236,250 |
Are there any reliefs from ATED?
It may be that there is no tax chargeable on the property as the tax charge is only usually applied when the director or shareholder lives in the property. If your business falls within one of the following categories then it may be eligible for relief from ATED:
- Property rental businesses – to include the special conditions (sale, demolition, and, conversion)
- Dwellings opened to the public
- Property developers (including qualifying exchange of dwellings interests)
- Property traders carrying on a property trading business
- Financial institutions acquiring dwellings in the course of lending
- Dwellings used for trade purposes (occupation by qualifying employees and partners)
- Farmhouses (occupation for the purposes of carrying on a trade of farming)
- Registered providers of Social Housing
What is the ATED filing deadline?
Where an ATED charge applies, an ATED Tax Return and the associated payment will be usually required by 30 April in the year for which the charge applies, i.e., 30 April 2021 for the period 1 April 2021 to 31 March 2022.
However, different rules apply where a property is acquired part-way through a year. Penalties and interest apply where payment and or filing dates are missed.
Please also be aware that if you sell your property, you may also have to pay ATED-related Capital Gains Tax.
Do I still need to do an annual return if no payment is due?
Whether or not a payment is due (i.e. you may be claiming for ATED relief) you still have to submit one of two returns. So, to meet these HMRC requirements, you will need to complete and send HMRC either an ATED return or a Relief Declaration Return.
At Treetops we offer a range of buy to let accounting services. If you would like us to help with either of the above returns then, please contact us no later than 15th April 2021 to ensure we have sufficient time to make the submission.
